## Facts

- In 1999, Snow Machines, Inc. (Snow Machines) entered into an installment sales contract with Song Mountain Resort, LLC (Song Mountain) for three snow-making machines used at Song Mountain’s ski resort.
- The contract provided that Snow Machines would retain title to the machines as collateral until Song Mountain paid the purchase price in full.
- Song Mountain defaulted, leaving an unpaid balance of $51,360.
- In September 2000, Song Mountain’s owner, Tully Recreation, LLC (Tully), signed an agreement to sell the Song Mountain ski resort to South Slope Development Corporation (South Slope), with a closing anticipated in May 2001.
- While South Slope arranged financing, the sale agreement provided for South Slope to lease and operate the resort from October 2000 through March 2001.
- Under that interim lease arrangement, South Slope paid rent to Tully (with amounts credited against the purchase price at closing) and paid taxes and insurance associated with the resort.
- By letter dated December 8, 2000, Snow Machines notified South Slope that it claimed an interest in the three snow-making machines.
- Tully and South Slope nonetheless closed the sale in May 2001, transferring the resort and associated personal property, including the snow-making machines, to South Slope.
- After obtaining an order to seize the machines, Snow Machines learned that possession had been transferred to South Slope at closing and then sued South Slope seeking either return of the machines or payment of the unpaid balance.
- Snow Machines moved for a prejudgment order of seizure (and related restraining relief) to secure the machines pending judgment; Supreme Court granted the motion, and South Slope appealed.

## Issues

1. Did Snow Machines make the showing required by CPLR 7102(d) to obtain a prejudgment order of seizure—specifically, a probability of success on the merits of its claim to the machines as against South Slope?
2. Does a buyer (or successor in possession) who received written notice of the seller’s retained-title/security interest before the May 2001 closing take the machines free of that interest because it operated the resort and made lease-related payments before receiving notice?

## Decision

- The Appellate Division, Third Department affirmed the order granting Snow Machines a prejudgment order of seizure, with costs.
- The court held that Snow Machines satisfied its burden under CPLR 7102(d) by showing a probability of success on the merits in the underlying action.
- The record supported Snow Machines’ claim because it retained title as collateral, Song Mountain defaulted with a substantial unpaid balance, and South Slope received notice of Snow Machines’ interest before the sale closed and the machines were transferred to South Slope.
- South Slope’s interim lease-and-operate arrangement did not defeat Snow Machines’ showing on the merits for purposes of prejudgment seizure.

## Legal Principles

- Under CPLR 7102(d), a prejudgment order of seizure is proper when the plaintiff demonstrates a probability of success on the merits of its claim to possession of the chattel.
- An installment sale in which the seller retains title to the goods until full payment functions as a security arrangement; upon default, the seller has a claim to the identified goods that may be enforced against parties who take subject to that interest.
- For purposes of evaluating a plaintiff’s likelihood of success, evidence that the defendant received direct notice of the plaintiff’s claimed interest before the defendant acquired the goods in the closing transaction supports the plaintiff’s superior claim to possession.
- On appellate review, where the plaintiff’s showing meets CPLR 7102(d) and the seized property is specifically identified chattel, an order granting prejudgment seizure will be upheld.

## Conclusion

The Appellate Division affirmed Supreme Court’s prejudgment seizure order because Snow Machines demonstrated a probability of success on its claim to the snow-making machines: it retained title as collateral under the installment contract, Song Mountain defaulted with $51,360 unpaid, and South Slope received written notice of Snow Machines’ interest before the May 2001 closing at which the machines were transferred.


Snow Machines, Inc. v. South Slope Development Corporation, 300 A.D.2d 906 (2002)